The rupee weakened by 34 paise to settle at 94.67 (provisional) against the US dollar on Monday, pressured by the strength of the greenback in international markets despite supportive capital inflows into the domestic economy.
According to forex market participants, the Indian currency remained volatile throughout the session. While steady inflows into debt and deposit instruments offered support, uncertainty surrounding developments in the Middle East and the continued firmness of the US dollar weighed on sentiment.
At the interbank foreign exchange market, the rupee opened at 94.42 against the dollar, down 9 paise from its previous close. During the day, it moved between a high of 94.24 and a low of 94.76 before ending the session at 94.67. The domestic currency had ended Friday's session 7 paise higher at 94.33 against the US dollar after recovering from early fluctuations.
Meanwhile, the dollar index, which measures the US currency's performance against a basket of six major global currencies, was trading marginally higher at 100.88, up 0.03 per cent. Market participants attributed the dollar's resilience to the US Federal Reserve's hawkish policy stance and lingering uncertainty surrounding the fragile US-Iran diplomatic process.
Also read: Sensex, Nifty rebound as oil prices ease
In the commodities market, Brent crude oil, the global benchmark, eased 1.75 per cent to USD 79.16 per barrel in futures trading, offering some relief to oil-importing economies such as India.
Domestic equity markets, however, ended on a positive note. The BSE Sensex gained 291.17 points to close at 77,094.07, while the NSE Nifty advanced 89.80 points to settle at 24,102.90.
Foreign institutional investors (FIIs) also provided support to financial markets, emerging as net buyers of Indian equities worth Rs 4,859.07 crore on Friday, according to exchange data.
On the geopolitical front, high-level talks involving Iran concluded in Switzerland on Monday, with negotiators agreeing to continue discussions through lower-level meetings during the remainder of the week. Iran and the United States also agreed to establish a "de-confliction cell" aimed at addressing the ongoing hostilities in Lebanon. The negotiations marked the beginning of a proposed 60-day diplomatic roadmap intended to achieve a long-term agreement to end the conflict involving Iran.
However, uncertainty persisted after Iran reiterated that it had shut the strategically important Strait of Hormuz over the weekend. The narrow waterway is a critical route for global energy shipments, although US officials maintained that maritime traffic through the passage was continuing without major disruption. Against this backdrop of geopolitical uncertainty, currency markets remained cautious, contributing to the rupee's decline against the strengthening US dollar.
Follow us
